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    corresp.htm

              600
      Travis, Suite 4200

              Houston,
      Texas 77002

              713.220.4200
      Phone

              713.220.4285
      Fax

              andrewskurth.com

      October
29, 2009

      Mr. H.
Roger Schwall

      Assistant
Director

      Securities
and Exchange Commission

      100 F
Street N.E., Stop 7010

      Washington,
D.C. 20549

                Re:

                Cheniere Energy,
      Inc.

                Form
      10-K for Fiscal Year Ended December 31,
2008

                Filed
      February 27, 2009

                File
      No. 001-16383

      Dear Mr.
Schwall:

      On behalf
of Cheniere Energy, Inc., a Delaware corporation (the “Company”), we enclose
the responses of the Company to comments received from the staff of the Division
of Corporation Finance (the “Staff”) of the
Securities and Exchange Commission (the “Commission”) by
letter dated October 15, 2009, with respect to the Company’s Form 10-K for
fiscal year ended December 31, 2008 (File No. 001-16383) (the “10-K”).  For
your convenience, the responses are prefaced by the exact text of the Staff’s
corresponding comment.

      The
Company acknowledges the following:  (i) the Company is responsible
for the adequacy and accuracy of the disclosure in the 10-K; (ii) Staff comments
or changes to disclosure in response to Staff comments do not foreclose the
Commission from taking any action with respect to the 10-K; and (iii) the
Company may not assert Staff comments as a defense in any proceeding initiated
by the Commission or any person under the federal securities laws of the United
States.

      Please
let us know if you have any questions or if we can provide additional
information or otherwise be of assistance in expediting the review
process.

    Sincerely,

    Meredith
S. Mouer

    cc:           Meg
A. Gentle (Cheniere Energy, Inc.)

    Austin     Beijing     Dallas      Houston      London      New
York     The
Woodlands     Washington, DC

          Cheniere
Energy, Inc.

          Form
10-K (File No. 001-16383)

          Company’s
Responses to

          SEC
Comment Letter dated October 29, 2009

      Form 10-K for the Fiscal
Year Ended December 31, 2008

    Management’s Discussion and
Analysis of Financial Condition and Results of Operations Liquidity and Capital
Resources, page 38

              1.

              We
      note from your risk factor disclosure on page 15 that “Our substantial
      existing indebtedness, prevailing economic and market conditions, as well
      as other factors, have adversely affected the availability and cost of
      additional financing, which has adversely affected our liquidity,
      business, financial condition and prospects.”  We further note
      from page 25 that “…additional sources of natural gas may be discovered in
      North America, which could further increase the available supply of
      natural gas and could result in natural gas being available at a lower
      cost than imported LNG.”  Given these disclosures, and the
      current pricing environment for natural gas in the United States, please
      expand your MD&A to explain how current prices impact your operations,
      your ability to service your debt obligations, and other ongoing cash
      requirements.  In this regard, please consider including an
      analysis of specific natural gas prices that would render the operations
      at your operational LNG receiving terminal(s) uneconomic, and discuss
      whether such developments would impact your ability to service your debt
      obligations.  See Item 303(a)(1) of Regulation
    S-K.

    Response:

    We are
primarily engaged in the business of providing terminal services for fixed fees
on a long-term basis to international LNG producers and
marketers.  Our ability to operate economically, meet ongoing cash
requirements, and service our debt obligations is dependent on the long-term
demand for these services, which is somewhat dependent on natural gas prices and
other market dynamics.

    We
believe that the long-run marginal cost to produce certain LNG and deliver it to
North America is lower than the long-run marginal cost to produce certain
domestic supplies of natural gas.  Therefore, we anticipate that the
long-term average price of natural gas in North America will be high enough to
support LNG development for delivery to North America.  Given that the
amount of undeveloped natural gas supply exceeds current and near-term potential
worldwide demand, we expect that there will always be projects seeking
investment based on delivery to North America. As such, we anticipate that the
demand for the terminal services we provide will be sufficient to allow us to
operate our terminals on an economic basis and service our debt
obligations.

    Furthermore,
we believe that the variable cost to produce certain LNG and deliver it to North
America is far lower than the variable cost to produce certain domestic supplies
of natural gas.  Therefore, we also believe that only extremely low
North American natural gas prices would provide a disincentive to deliver LNG to
North America on a short-term basis.

    Lastly,
we believe that North America competes for LNG with alternative international
markets and, therefore, it is the short-term demand in alternative markets and
the relative price between these markets that impacts the level of imports of
LNG into North America.  It is impossible to determine the specific
natural gas prices in North America that would limit LNG imports because any
such determination must be made relative to both the prices in alternative
markets and the demand for natural gas in those markets.

        2

          Cheniere
Energy, Inc.

          Form
10-K (File No. 001-16383)

          Company’s
Responses to

          SEC
Comment Letter dated October 15, 2009

            We will expand our MD&A
disclosure in future filings to explain how our operations and our ability to
service our debt obligations and other ongoing cash requirements are dependent
on market
factors.  Below is an

            example of the type of disclosure
we may include in our 2009 Form 10-K.

    “Sabine
Pass LNG and Freeport LNG, of which we are a 30% limited partner, provide LNG
terminal services for fees.  At Sabine Pass, the fees are fixed and
escalate with inflation and are not indexed to natural gas prices.  At
Freeport, the fees are fixed, escalate with inflation and, to a limited extent,
indexed to natural gas prices. Until the expiration of our 20-year TUAs, there
is no price level which would render our terminal operations uneconomic or limit
Sabine Pass or Freeport from servicing its debt obligations.

    Our
strategies to enhance near-term liquidity are focused on efforts to exploit the
TUA capacity we have reserved through Cheniere Marketing at the Sabine
Pass LNG receiving terminal, which is dependent on the balance of worldwide
supply and demand for natural gas and LNG and on the relative prices for natural
gas in North America and alternative international markets.  [To be
drafted for the Form 10-K: discuss results of worldwide natural gas and LNG
markets for 2009.]  Due to our existing cash balances, there is no
price level for natural gas which would limit our ability to fund our ongoing
cash requirements or service our corporate level debt obligations until at
least the earliest date when principal payments may be
required on our existing indebtedness, which is August 2011.

    Our
strategies to improve our capital structure and address maturities of our
existing indebtedness may include entering into long-term TUAs or LNG purchase
agreements that allow us to refinance debt, issue equity or other securities, or
sell assets.  Our ability to enter into long-term arrangements is
dependent on LNG producers and international LNG buyers investing new capital
and securing market access to North America on a long-term
basis.  Current North American natural gas prices support long-term
profitability for LNG production.  However, if there is no demand for
our terminal services, our ability to address our maturities through commercial
business would be limited and we would rely on issuing equity or other
securities or selling assets to improve our capital structure.”

    Note 19—Financial
Instruments, page 86

              2.

              We
      have considered your response to prior comment number one, noting your
      2007 Term Loan and 2008 Convertible Loans are, among other factors, i)
      held by a few investors, ii) purchased and/or sold on an infrequent basis,
      and iii) have unique covenants and collateral packages.  Base on
      your response, it is unclear how the factors you cite preclude estimating
      the fair value of these instruments.  Please provide us with
      additional information to understand how each of the factors you have
      identified precludes knowledge of the basic factors utilized in estimating
      fair value.  Otherwise, we would expect you to provide the fair
      value disclosures prescribed under FAS 107.  In this regard, the
      context provided for the term practicable in paragraph 15 of FAS 107 does
      not appear applicable to the factors you cite in your
      response.

    Response:

    We will
provide a fair value disclosure prescribed under FAS 107 in our future filings,
beginning with our third quarter Form 10-Q.  Our disclosure will read
substantially as follows:

    “The 2007 Term Loan and 2008 Convertible Loans are closely held by
few holders and purchases and sales are infrequent and are conducted on a
bilateral basis without price discovery by us.  These loans are not
rated and have unique covenants and collateral packages such that a comparison
to other instruments would be imprecise. However, we have provided an estimate
of the fair value of these loans as of September 30, 2009, based on an index of
the yield to maturity of CCC rated debt of other companies in the energy
sector.”

        3

          Cheniere
Energy, Inc.

          Form
10-K (File No. 001-16383)

          Company’s
Responses to

          SEC
Comment Letter dated October 15, 2009

              3.

              We
      note your proposal in response to our prior comment number three to expand
      your disclosure in future filings to “clarify that the intersegment
      transactions between the Company’s different business segments is
      eliminated to arrive at the total consolidated revenue amount found in the
      consolidated statements of operations for each respective
      period.”  Based on your response, please provide us with a copy
      of the draft disclosure you intend to include in future
      filings.  In addition, please tell us what consideration you
      have given to separately disclosing revenues from transactions with other
      operating segments, as prescribed by paragraph 27(b) of FAS
      131.

    Response:

    Below is
a draft disclosure we intend to include in future filings to clarify that the
intersegment transactions between the Company’s different business segments is
eliminated to arrive at the total consolidated revenue amount found in the
consolidated statements of operations for each respective period:

                  [Period]
      Ended

                  [Month]

                  [Period]
      Ended

                  [Month]

                  [Year]

                  [Year]

                  [Year]

                  [Year]

                  Revenues:

                  LNG
      receiving terminal (1)

                  $

                  $

                  $

                  $

                  Natural
      gas pipeline

                  LNG
      & natural gas marketing (1)

                  Eliminations
      (2)

                  Corporate
      and other (3)

                  Total
      consolidated

                  $

                  $

                  $

                  $

                  Net
      income (loss):

                  LNG
      receiving terminal (1)

                  $

                  $

                  $

                  $

                  Natural
      gas pipeline

                  LNG
      & natural gas marketing (1)

                  Corporate
      and other (3)

                  Total
      consolidated

                  $

                  $

                  $

                  $

                  Expenditures
      for additions to long-lived assets:

                  LNG
      receiving terminal

                  $

                  $

                  $

                  $

                  Natural
      gas pipeline

                  LNG
      & natural gas marketing

                  Corporate
      and other

                  Total
      consolidated

                  $

                  $

                  $

                  $

              (1)

              Segment
      revenues include intersegment sales to affiliated subsidiaries that
      primarily include the TUA fees of [$XX] million and [$XX] million paid by
      Cheniere Marketing to Sabine Pass LNG, which are eliminated in
      consolidation for the [Periods and Years ended], respectively. Affiliated
      sales are recognized on the basis of contractual agreements. Operating
      income is derived from revenues and expenses directly associated with each
      segment.

              (2)

              Eliminates
      intersegment sales primarily related to
[cause].

              (3)

              Includes
      corporate activities and oil and gas exploration, development and
      exploitation activities. Our oil and gas exploration, development and
      exploitation activities have been included in the corporate and other
      column because these activities do not materially impact our financial
      statements. Amounts are restated to include oil and gas exploration,
      development and exploitation activities within the corporate and other
      segment as of December 31, 2008 and for the three and nine month periods
      ended September 30, 2008.

    As
described in the draft footnote (1) above, we have described and quantified the
revenues from transactions between the Company’s different business
segments.  In future filings, we will describe and quantify any new
material intersegment revenues that may be presented.

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